How Much Will You Spend on Social-Media Marketing Next Year?

Haven't a Clue? It's OK, You're Not Alone, and Here's Why

Next year, 80% of companies with 100 or more employees are expected to use social-media tools for marketing, up from 73% in 2010 and nearly double the usage rate in 2008, according to eMarketer. Surely that means big budget increases for next year, right?

In some cases the answer is yes. But for a lot of marketers, the budgeting question is getting harder to answer, not easier. If there's one thing I learned from researching my new report on "Social Media in the Marketing Mix," it's that many marketers have no idea how much they're budgeting on social -- or no good way to tabulate it. Here's why:

Too many cooks. As marketers continue to ramp up their social-media efforts, they are still using multiple resources, both internal and external, to create Facebook pages, manage Twitter feeds, develop viral videos and, of course, measure the impact.

Businesses remain torn over whether the best strategy is to manage social media through their corporate communications group, their marketing department, or a separate social-media group. Adding to the complexity: marketers are inundated with pitches from ad agencies, PR agencies and social-media vendors -- all hungry for new projects for 2011.

Social media is free, right? In some business sectors, the thinking still holds that social media is free, or nearly free. Although earned media -- the value that companies get when their marketing messages spread virally -- is indeed free publicity, there is almost always a cost associated with it, whether it be staffing, creative development or monitoring the results.

The good news is most marketers say they are increasing social-media spending next year. But the actual dollar amounts are all over the map.

In a worldwide survey by SEOmoz, a search-marketing company, more than half of the 9,000 respondents said their budget for outsourced social-media marketing was zero. Only 2.9% said they spent more than $5,000 per month.

On the other end of the spectrum is Altimeter Group, which surveyed 140 social-media strategists at major businesses for a report on the corporate social-media strategist function. One-third of respondents indicated that their company was spending between $100,000 to $500,000 in 2010, and 23% had a budget of $500,000 or more. These companies can be considered among the leading adopters of social media.

There are few benchmarks. Marketers don't agree on how much of their marketing budgets they should spend on social media. Surveys indicate that marketers spend 4% to 11% of their online marketing budgets on social media. This wide divergence is indicative of the fact that social-media marketing budgets are spread across multiple departments and groups, and that some types of companies and industries are more advanced than others.

What does this mean? Even if companies find it impossible to set a specific budget for social media, they can still take a holistic approach, incorporating it into their marketing planning from the start. At General Motors, budgets for social media next year will come from the brand marketing groups, according to social media chief Christopher Barger.

That means GM will do a better job of aligning its social strategy with the rest of its marketing strategy. And by shifting management to the brand groups, it does something more important: it gives social media a place at the adults' dinner table, not the kids' table.

That, in the end, may be a better strategy. Maybe marketers should worry less about how much they are spending on social media, or whether there should be a separate budget, and more about whether those dollars are working as hard as they can, producing real, quantifiable results.